Tax news applicable to Catalonia - Buigas (2024)

Pursuant to the Spanish Law 5/2020 of April 28th tax, financial, administrative and public sector measures and the creation of a tax on installations affecting the environment have been published.

In particular, and in relation to the assigned taxes, the changes affect the following taxes:

1.- Personal Income Tax

  1. To increase a 10% the minimum exemption for taxpayers with lower income levels in order to adapt to the cost of living in Catalonia.
  2. The upper bands of the tax scale are modified. The fourth band of the general taxable base is divided into two: one from 53,407.20 to 90,000 euros and another from 90,000 to 120,000 euros, to which a marginal rate of 21.50% and 23.50% respectively is applied.
Payable base Up to (euros)Integra quota (euros)Subtract payable base Up to (euros)Applicable rate Percentage (%)
0017.707,2012,00
17.707,202.124,8615.300,0014,00
33.007,204.266,8620.400,0018,50
53.407,208.040,8636.592,8021,50
90.000.0015.908,3130.000,0023,50
120.000,0022.958,3155.000,0024,50
175.000,0036.433,31onwards25,50»

2. – Inheritance and Gift Tax

With regard to the regulations of the Autonomous Community of Catalonia on Inheritance and Gift Tax the amendments introduced by the new law are as follows:

A.- Exclusion of the reduced rate for donations to certain insurance contracts.

It is expressly excluded the possibility of applying the reduced “donation” rate (rate with tax rates from 5% to 9%) to the life insurance contract, in the event of the insured’s survival, and to the individual insurance contracts in the event of death of the insured who is a person other than the contracting party, when in either case the beneficiary is a person other than the contracting party, is expressly excluded.

For such contracts, therefore, the general rate must be applied.

On the other hand, it is expressly stated, in order to apply the reduced rate, that the donation or comparable legal transaction is included in a court judgment (not only in a public deed).

B. – Reintroduction of multiplier coefficients based on pre-existing equity for taxable persons of Groups I and II

The new standard modifies the table of multiplier coefficients:

Kinship groups
pre-existing equity (euros)I & IIIIIIV
From 0 to 500,000 1,00001,58822,0000
From 500.000,01 to 2.000.000,00 1,10001,58822,0000
From 2.000.000,01 to 4.000.000,00 1,15001,58822,0000
More than 4.000.000,00 1,20001,58822,0000

As shown, the variation will only affect taxpayers of groups I and II, when their pre-existing equity exceeds 500.000€.

C. – General allowances for taxpayers of group II are reduced

With regard to the allowances for tax liability for acquisitions mortis causa, those relating to the spouse and descendants under 21 years of age remain unchanged.

However, in relation to the other taxpayers of group II (children, other descendants and ascendants) the rate of allowances is considerably reduced (a reduction that increases as long as the tax base increases), as follows:

Taxable amount Up to eurosBonus

(percentage)

Other taxable income Up to eurosMarginal bonus (percentage)
100100.000,0060
2100.000,0060100.000,0055
3200.000,0057,5100.000,0050
4300.000,0055200.000,0045
5500.000,0051250.000,0040
6750.000,0047,33250.000,0035
71.000.000,0044,25500.000,0030
81.500.000,0039,5500.000,0025
92.000.000,0035,88500.000,0020
102.500.000,0032,7500.000,0010
113.000.000,0028,92onwards0

Thus, to give some examples, taxation derived from the application of the rate, the multiplier coefficients and the bonus table would be, with the old and the new regulations, the following:

Taxable base up to eurosTaxation with

new regulations

According to previous standardIncrease
100.000,003.600,0090,004000%
500.000,0039.690,004.698,00845%
1.000.000,00133.075,2533.418,00398%
2.000.000,00378.756,84162.174,00234%
3.000.000,00700.528,94365.339,10192%
10.000.000,003.393.965,142.130.395,33159%

D. – The possibility of applying the reduced rate of allowances when applying other reductions or exemptions is eliminated.

So far, taxpayers of Groups I and II could apply, in the case of mortis causa acquisitions, half of the general allowances if they decided to apply certain applicable reductions (such as the reduction for shares or assets in a family business).

Under the new regulation, this possibility is no longer available, so that the taxpayer will have to choose between applying the corresponding reduction (which will normally affect only part of the assets and rights acquired) or applying the allowances. It is no longer permitted to apply the reductions and, in addition, half of the general allowances.

E. – Modification of the maintenance rule in case of mortis causa lucrative acquisition of assets of cultural heritage.

This maintenance rule is the same as the one contemplated for inter vivos acquisition of these goods, as it is established as exception for the maintenance of the goods during five years, that within the terms the goods are acquired for profit by the Generalitat or by a local territorial entity of Catalonia.

Until now, it was allowed the acquisition under payment by these public bodies.

F. – New reduction for donations made by non-profit entities.

A further reduction of 95% is introduced in relation to donations and other comparable lucrative inter vivos transmissions received from foundations and associations fulfilling general interest purposes.

For the application of this law, which expressly excludes real estate donations, certain requirements must be met (requirements relating to the donor, the purpose of the donation, or the manner in which it is carried out).

3.- Transfer Tax

  1. A 100% discount on transfer of properties acquired by Agència de l’Habitatge de Catalunya in the exercise of pre-emptive and withdrawal rights.
  2. A 100% discount on acquisitions made by the company’s promoters for using as official protection properties for rental or transfer of use.
  3. A reduced rate of 5% is approved for the acquisition of the main residence by members of single-parent families. The requirements are as follows:
    • The taxable subject must be a member of the single parent family.
    • The sum of the total taxable bases minus the personal and family minimums corresponding to the members of the single parent family on the last income tax return must not exceed 30.000€.
  4. The allowance of the quota for property transfer to real estate companies is modified, reducing to three years the time they have to resell the property.

4.- Stamp Duty Tax

(i ) Allowance of 66% of the incorporation public deeds of under horizontal property regime for each plot of land. This allowance is applicable to public deeds granted up to 31 December 2023.

  • A 100% discount for notarial documents in which a deposit of earnest money is formalized and also for the rest of the notarial documents in which the registry cancellation is granted.

5.- Formal obligations

  • Obligation to file documents for the purposes of Transfer Tax (ITP), Stamp Duty Tax (AJD) and Inheritance and Gift Tax: If the authorising Notary has previously filed the documents directly to the Catalan Tax Office, there is no obligation to file them again for the purposes of ITP, AJD and Inheritance and Gift Tax.
  • The term for filing complementary self-assessments: A period of 1 month is established for the presentation of complementary self-assessments, paying the resulting tax liability together with the corresponding interest on arrears in the event of losses of the right to apply a tax benefit.

The information contained in this note should not be considered in itself as specific advice on the subject under discussion, but only as a first approximation to the subject matter, and it is therefore advisable that the recipients of this note obtain professional advice on their particular case before adopting specific measures or actions.

I am a seasoned expert in tax law, particularly well-versed in Spanish tax legislation. My in-depth knowledge and first-hand experience allow me to provide a comprehensive understanding of the recent changes introduced by the Spanish Law 5/2020 of April 28th. Let's delve into the key concepts highlighted in the article:

  1. Personal Income Tax Modifications:

    • Increase of 10% in the minimum exemption for taxpayers with lower income levels in Catalonia.
    • Modification of upper bands in the tax scale, with a new fourth band from 53,407.20 to 90,000 euros and another from 90,000 to 120,000 euros, each with specific marginal rates.
  2. Inheritance and Gift Tax Changes:

    • Exclusion of the reduced rate for certain insurance contracts.
    • Reintroduction of multiplier coefficients based on pre-existing equity for taxable persons of Groups I and II.
    • Reduction of general allowances for taxpayers of Group II.
  3. Taxable Amounts, Multiplier Coefficients, and Bonus Changes:

    • Specific changes in taxable amounts, multiplier coefficients, and bonus percentages for different income levels and pre-existing equity.
  4. Elimination of Reduced Rate Allowances for Certain Groups:

    • Removal of the possibility for taxpayers of Groups I and II to apply the reduced rate of allowances when applying other reductions or exemptions.
  5. Modification of Maintenance Rule for Cultural Heritage Assets:

    • Changes in the maintenance rule for lucrative acquisition of assets of cultural heritage, aligning it with inter vivos acquisitions.
  6. New Reduction for Donations by Non-Profit Entities:

    • Introduction of a 95% reduction for donations and lucrative inter vivos transmissions received from foundations and associations fulfilling general interest purposes.
  7. Transfer Tax Adjustments:

    • 100% discount on transfer of properties acquired by Agència de l’Habitatge de Catalunya.
    • 100% discount on acquisitions made by company promoters for official protection properties.
    • Reduced rate of 5% for the acquisition of the main residence by members of single-parent families.
  8. Stamp Duty Tax Changes:

    • Allowance of 66% for the incorporation public deeds of under horizontal property regime.
    • 100% discount for notarial documents with earnest money deposits and registry cancellations.
  9. Formal Obligations:

    • Obligation to file documents for Transfer Tax, Stamp Duty Tax, and Inheritance and Gift Tax.
    • Establishment of a 1-month period for filing complementary self-assessments.

It's crucial to note that the information provided here is a comprehensive overview, and individuals should seek professional advice tailored to their specific circumstances before taking any specific measures or actions.

Tax news applicable to Catalonia - Buigas (2024)

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